Obama Makes Hospital Charge Masters Public

And the best article on the implications of this, surprisingly, comes from Huffington post authors Young and Kirkham:

The database released on Wednesday by the federal Centers for Medicare and Medicaid Services lays out for the first time and in voluminous detail how much the vast majority of American hospitals charge for the 100 most common inpatient procedures billed to Medicare. The database — which covers claims filed within fiscal year 2011 — spans 163,065 individual charges recorded at 3,337 hospitals located in 306 metropolitan areas.

Within the nation’s largest metropolitan area, the New York City area, a joint replacement runs anywhere between $15,000 and $155,000. At two hospitals in the Los Angeles area, the cost of the same treatment for pneumonia varies by $100,000, according to the database.

We discussed this issue before when it was brought to the public’s attention by Brill’s “Bitter Pill” piece in Time. Hospitals have a wildly-irrational billing scheme that represents a war they are in with payers. However, Brill was wrong to attribute excess costs of US healthcare to the charge master problem, while the HuffPo piece gets this issue right. It’s not a problem for insurance companies, or government, since they don’t pay these bills. It only screws payers without negotiating power or knowledge of how to navigate these bills – the uninsured:

“The charge masters are totally irrational,” Robert Laszewski, a former health insurance company executive who consults for health care companies as president of Alexandria, Va.-based Health Policy and Strategy Associates, wrote in an email to The Huffington Post.

Hospitals used to base prices on health care costs and on the need for profit that would, among other things, enable them to make investments in their facilities, Laszewski explained. “They became the baseline from which the hospitals started,” he wrote. But over time, hospitals raised charges in anticipation of negotiating discounts with private health insurance companies while maintaining their revenue streams, he said.

Prices have continued growing over decades to the point where there is no plausible justification for them, according to Laszewski: “Over the years, the charge masters have become more and more disconnected from reality.”

And since they haven’t been public or shared before now, I suspect each hospital probably has some set of services that appear to be priced excessively compared to their near neighbor. The costs haven’t grown so much from a response to the treatments they provide, so much as the perceived ability to force insurers to pay a larger portion. Each hospital has probably independently evolved a strategy to do this, hence the wide variability in pricing.

The charges are the prices hospitals establish themselves for the services they provide. Although Medicare and Medicaid don’t base their payment rates on these figures, private health insurance companies typically do, which means they usually pay more for the same health care than the government does. That translates into higher premiums for people with insurance. And uninsured people are expected to pay the full list price or a discount from that number, which tends to mean they pay more than anyone else.

When a hospital doesn’t get paid as much as it wants from one source, it tries to make up the difference in other ways, such as billing so-called self-pay patients — almost always the uninsured — for the full list price of a service, said Robert Huckman, a health care expert at Harvard Business School. Even when hospitals agree to huge discounts for patients who can’t pay the bill, those discounts are taken from inflated prices much higher than those the government or private insurance companies pay, he said.

“The charge master is complete nonsense that really doesn’t matter — unless you are an uninsured person and you’re getting these huge bills driving you toward bankruptcy,” Laszewski wrote. “The biggest irony of the U.S. health care system is that only the uninsured — often people who don’t have a lot of money — are the only ones the hospital expects to pay these incredibly inflated list prices!”

Hospitals also inflate charges to raise money for things that aren’t related to treatments, said former Sen. David Durenberger (R-Minn.), who is senior health policy fellow at the University of St. Thomas in Minneapolis.

“The biggest factor by far, in my experience, is what are you trying to cross-subsidize,” he said. Hospitals will increase charges to finance things like technology upgrades and education and research and to compensate for their operational efficiencies, Durenberger said.

We’ve discussed extensively the sources of excess costs in US healthcare. It’s not the chargemaster. It’s excessive administrative costs of private health insurance, excessive drug costs (everything from direct-to-consumer advertising, the fact US citizens are charged more and GWB made it so medicare can’t negotiate for lower drug prices), inefficient delivery (primary care in the ER), redundant delivery, lack of a government-implemented or regulated standardized electronic medical record (EMRs from private companies actually increase costs), defensive medicine, excessive end-of-life care, and excessive reimbursements of procedures and diagnostic testing.

What will this data release mean for health care costs? Probably not much as the hospitals will now just normalize excessive bills to each other, rather than just having their own individually-irrational billing scheme. The charge master is unjust, but it’s not why we pay more for healthcare overall.

There is a solution to the charge master problem though, and it was found in New Jersey. Force hospitals to charge the uninsured what they charge Medicare. It’s that simple. It’s that easy.

Three reasons the Supreme Court should uphold ACA

With the Supreme Court hearing arguments for the next three days on the Affordable Care Act, many commentators, including Dahlia Lithwick appear to have so much contempt for the Roberts court that they believe the issue will likely be settled on politics rather than law.

The first proposition is that the health care law is constitutional. The second is that the court could strike it down anyway.

The law is a completely valid exercise of Congress’ Commerce Clause power, and all the conservative longing for the good old days of the pre-New Deal courts won’t put us back in those days as if by magic. Nor does it amount to much of an argument.

Despite the fact that reading the entrails of those opinions suggest that they’d contribute to an easy fifth, sixth, and seventh vote to uphold the individual mandate as a legitimate exercise of Congressional power, the real question isn’t whether those Justices will be bound by 70 years of precedent or their own prior writings on federal power. The only question is whether they will ignore it all to deprive the Obama of one of his signature accomplishments.

Professor Randy Barnett, the intellectual power behind the entire health care challenge, wrote recently that Justice Scalia could break from his previous opinions–freeing him to strike down the Affordable Care Act–“without breaking a sweat.” I suspect that’s right.

If that’s true, we should stop fussing about old precedents. These old milestones of jurisprudence aren’t what will give Scalia pause. What matters is whether the five conservative justices are so intent in striking down Obama’shealthcare law that they would risk a chilly and divisive 5-4 dip back into the waters of Bush v. Gore and Citizens United.

It disturbs me when legal commentators as experienced and knowledgeable as Lithwick have essentially given up on the notion that the court is non-partisan or above the political fray. Instead, they seem to think it’s just another political body, making decisions based on partisan point-scoring over legitimate constitutional analysis. With the tea party rallying to keep us uninsured under the false notion that the bill will increase costs (it will actually reduce the deficit according to the CBO) and impinge their freedoms. These are the false arguments that people like Nick Gillespie (or libertarian Fonzie) are using, quite successfully, to convince the American people to oppose their own interest. Gillespie argues in his three point essay that (1) it’s unconstitutionally intrusive legislation (2) it’s price tag is ballooning, and (3) it won’t make us healthier. The first claim is debatable since it’s ultimately up to the courts. However good arguments suggest congress does have the power to pass such regulation.

For one previous case like Wickard and Raich suggest extensive powers for congress to regulate commerce. Second, if one of every seven dollars is spent on healthcare, it represents a significant portion of the economy. Third, and most importantly, the uninsured inflict an economic penalty on taxpayers and the insured, so rather than claiming they have a right not to buy, I would argue we have a right to address the cost the uninsured inflict on society. The penalty for not carrying insurance I believe makes complete sense in this regard.

The second claim is blatantly false and his description of the costs as “ballooning” is unsupportable based on the CBO reports. This talking point is an outright lie being spread far and wide by right wingers. The CBO director had to issue a comment to correct this widespread deception.

The third claim is a bit of a red herring. The health benefits of people being insured may eventually result in a healthier population but probably not by much and it’s besides the point. We’re not arguing the law will make us healthier. We’re arguing that the reform law will reduce healthcare expenditures, and protect people economically from the often devastating costs of illness.

But rather than just knocking down their arguments I think it’s important to remind people of the positive reasons we should support this bill. So I have my own list of 3 reasons this bill should be upheld and we should all support it.
Continue reading “Three reasons the Supreme Court should uphold ACA”

What is the cause of excess costs in US healthcare? Take three – signs of reform

We’ve already extensively discussed why it costs twice as much for the US to provide healthcare for it’s citizens all the while failing to cover health care for all. Most recently, we discussed the hidden tax of the uninsured and the perverse incentive structure of US healthcare which encourage costlier care, more utilization, and more procedures.

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To summarize, the US spends more on healthcare compared to other industrialized nations because

  1. We deliver it inefficiently
  2. Without universality problems present when critical and in the ER
  3. Fee-for-service incentives in the form of excessive reimbursement for procedures and hospitals ramp up costs by encouraging doctors to overuse expensive tests and perform more procedures
  4. Direct-to-consumer advertising (we are one of two countries that allow advertisement of prescription drugs) and medicare part D encourage overuse of pharmaceuticals while tying providers hands when it comes to bargaining for lower drug prices
  5. Defensive medicine
  6. Poor management of end-of-life decisions and excessive and futile overuse of resources at the end of life
  7. Absence of a universal electronic medical record (or record format) to prevent redundancy and waste.

Now, what about the new Affordable Care Act? Are there going to be measures to address these sources of excess cost while creating universal coverage? The WaPo has an article outlining reforms addressing many of these specific problems.

First off, fee-for-service is going to be discouraged with increased use of “bundling” of costs:
Continue reading “What is the cause of excess costs in US healthcare? Take three – signs of reform”

Supreme Court to Debate Affordable Care Act Next week – and plaintiff's case has imploded

With the impending, and unprecedented, 3 days of arguments over the Affordable Care Act occurring early next week, it’s interesting to see that the test case being used to challenge the law has now become a test case demonstrating the necessity of the law.

Mary Brown, the woman who asserts no one has the authority to make her buy health care is now bankrupt, at least in part due to medical bills. From theLA Times article:

Mary Brown, a 56-year-old Florida woman who owned a small auto repair shop but had no health insurance, became the lead plaintiff challenging President Obama’s healthcare law because she was passionate about the issue.

Brown “doesn’t have insurance. She doesn’t want to pay for it. And she doesn’t want the government to tell her she has to have it,” said Karen Harned, a lawyer for the National Federation of Independent Business. Brown is a plaintiff in the federation’s case, which the Supreme Court plans to hear later this month.

But court records reveal that Brown and her husband filed for bankruptcy last fall with $4,500 in unpaid medical bills. Those bills could change Brown from a symbol of proud independence into an example of exactly the problem the healthcare law was intended to address.

I think at this point the solicitor general just has to point at the plaintiff and say “See! See!”.

People without health insurance are still covered by the ethical obligations of EMTALA. They can still see doctors and get treatment and not pay their bills. Then who pays for it? All of the rest of us.

The “individual mandate” should be called a “personal responsibility” provision, because the fact is all these rugged individualists are parasites. They are refusing to pay into the system then benefiting when they, inevitably, need to use it.

And how about the argument that the commerce clause can’t for such an individual responsibility provision?

The couple owed $2,140 to Bay Medical Center in Panama City, $610 to Bay Medical Physicians, $835 to an eye doctor in Alabama and $900 to a specialist in Mississippi.

“This is a very common problem. We cover $30 million in charity and uncompensated care every year,” said Christa Hild, a spokeswoman for the hospital center. “If it’s a bad debt, we have to absorb it.”

So, this couple has generated bills in three different states that they now will not be able to pay and the rest of us have to eat the bill for them. It’s amazing how the plaintiff’s own actions have justified nearly every argument for the bill. When healthcare now represents something like 1 in 7 dollars spent in this country, how can we argue that the commerce clause does not allow congress to regulate it?

More Evidence that Universal Health Care Would be Less Expensive

We’ve written quite a bit about single payer health care systems as well as other models that are a mixture of public and private spending.

We’ve also analyzed some of the sources of excess cost of US healthcare to other countries. What is uniformly true about universal health care systems is that they all spend less on medical care per capita than the US. The next nearest country in spending to us, France, spends 50% of what we do per capita while providing top notch care, possibly the best in the world. And while the cause of our excess costs are multifactorial, one of the greatest sources of excess cost is likely due to increased use of emergency rooms over primary care providers. We already have universal healthcare, if someone shows up injured or ill, hospitals are obligated to treat them. But forcing people to come to the ER when their problems have become critical increases the costs of treatment dramatically. Now a new paper in Health Affairs demonstrates the cost of ER use over PCPs and their findings confirm that as much the costs of the uninsured to the health care system dropped by 50% once low-income uninsured patients received health coverage. This is good news as it suggests as health care reform is enacted we should see huge savings just from having a universal system.

See more below…
Continue reading “More Evidence that Universal Health Care Would be Less Expensive”

Welcome Back to Denialism Blog

Despite rumors to the contrary, I am not dead. Instead I’ve been working hard as a new surgical intern and sadly not finding the time to write for the denialism blog. However, now more than ever, it seems that we need to talk about the problem of denialism.

Two major new issues for denialism have cropped up, and both are major new forms of political denialism. The first, I’ll broadly describe as Obama-denialism. Obama is a muslim, Obama was not born in the US, there is a giant conspiracy involving the Hawaii Secretary of State, the Democratic Party and muslims worldwide to take over the US government with a madrassa-trained presidential double agent etc. These are of course nonsense. FighttheSmears a website created by Obama supporters has most of the more ridiculous rumors debunked, including the absurd birth certificate/birther conspiracy theory. appropriately mocking LA Times blog entry. Whatever. As readers of denialism blog, it should have been clear from the get-go that this is just the usual conspiracist-drivel propagated by people who are upset at having a black president, and, just like the truthers, holocaust deniers, AIDS denialists, or any other group driven by racism, paranoia or just plain stupidity they won’t be satisfied by any evidence that contradicts their illogical conclusions. The format of the arguments is prima-facie absurd. The conspiracies are non-parsimonious, and lead immediately to more questions that just don’t make any sense. Despite this, bigots and crackpots like Fox News and Lou Dobbs “cover the controversy” to keep it stirred up. We must address it for what it is, closet racism and sour grapes over losing an election.

The second major issue, even more distressing to me now that I’m fully immersed in our health-care system, is that of universal health care denialism. Most upsetting to me was pronouncements like that of Sarah Palin that health care reform will lead to “death panels”. This is where the political opponents of progressive governance have crossed the line from the usual political ignorance and lies to truly despicable tactics designed to sink health care reform at any cost. The reality of the language originally in the bill was that it was designed to encourage physicians to have end-of-life discussions with their patients by paying them for such consultations. This is an area in which our health system currently fails miserably to the detriment of our patients. We truly need to have all patients interacting with our health system to have frank discussions about their wishes at the end of their lives, to have living wills, and make their desires for their level of intervention clear before they end up in the ICU, on a ventilator, and having invasive treatments performed ad nauseum that they may or may not approve of if they were able to communicate their wishes. But no, the political opponents of health care reform have instigated a scorched-earth policy, and even something as noncontroversial as asking people what they want their physicians to do when they’re sick has been thrown under the bus by the denialists. Other lies? Universal health care reform will turn us into communist Russia! A belief inconsistent with the fact that every other country in the industrialized world has survived the conversion to universal systems without requiring Stalinist dictatorships to enforce the dastardly public option. These arguments transcend mere denialism and can only be described as ideological insanity.

There is a legitimate debate to be had over health care, but we clearly are not having it. One legitimate question is how do we pay for it? I’m confident that reform will pay for itself and it is more expensive not to have universal access. As we discussed in our health care series, every other country in the world has accomplished this feat, provide equivalent or measurably better care in terms of access, health of populations, and life expectancy. Despite their universal coverage they all spend less than half as much per capita than the US on health coverage. Having people access the system in our ERs, lacking preventative care, and failing to provide the universal inexpensive interventions costs more than just providing care to people. After all, we already pay for the uninsured, hospitals and doctors are ethically obligated to provide care for everyone who walks in the door, insured or not. The costs of covering the uninsured are already built into our excess costs. Worse, having a administrative system designed to deny care is costly and unnecessary. The “privatization” or “subcontracting’ of medicare administration under Bush increased the cost of healthcare administration by 30% in three years despite the number of patients covered increasing by only about 4%. Paying for things in a planned, thoughtful and systematic way is cheaper than allowing problems to stew and boil over. I’ve already had way too many patients showing up in the ER with disastrous and expensive health problems requiring a huge expenditure of resources that if they had been addressed early would have cost next to nothing. And yes, they always tell me they didn’t get it addressed before it was critical because they lacked insurance. This is stupid and not the kind of care I want to be providing. Another legitimate question is will universality damage our technological and research prowess? Again I believe the answer is no. The US has excellent technology and research because we pay for it through government agencies like the NIH. The technology won’t go away because that has more to do with the culture of our healthcare system than the fact that we have oodles of money to pay for it (because we don’t really). It’s also not a fact that our technology necessarily makes our care better. CT scans, and MRIs are not as important to provision of health care as having ready access to services and adequate access to primary care physicians and preventative care. Another good question, is a public option necessary? Again I believe not. While I believe countries that provide a public option like Australia are ones on which we may model our system, other countries such as the Netherlands or Germany have developed excellent healthcare systems through insurers by tightly regulating them and not letting them screw their citizens. Here’s a great question, would anyone under these systems choose the US one? As evinced by the commentary from our health system, the critics of universal healthcare are speaking from ignorance when they claim citizens of other countries are suffering in their systems. The data we presented, and reinforced by commentary from all over the world, was that these systems have problems, but no one in their right mind would trade them for the US system.

Let’s get back to having a public debate that is not overwhelmed by the ideological fanatics and deniers and instead focus on the very real and critical problems that this president was elected to address. The denialists and their scorched earth tactics have done a great deal of harm to our debate on reform. Now more than ever, we need to talk about the difference between denialism and debate.

The Obama Plan – Part I

We’re starting to hear about how Obama intends to implement healthcare in this country.

President Barack Obama says he’s open to requiring all Americans to buy health insurance, as long as the plan provides a “hardship waiver” to exempt poor people from having to pay.

Obama opposed such an individual mandate during his campaign, but Congress increasingly is moving to embrace the idea.

In providing the first real details on how he wants to reshape the nation’s health care system, the president urged Congress on Wednesday toward a sweeping overhaul that would allow Americans to buy into a government insurance plan.

Obama outlined his goals in a letter to Sens. Edward Kennedy, D-Mass., and Max Baucus, D-Mont., chairmen of the two committees writing health care bills. It followed a meeting he held Tuesday with members of their committees, and amounted to a road map to keep Congress aligned with his goals.

The letter published at whitehouse.gov, lays out some basic ideas, but it seems as though Obama is willing to have congress work out the specifics.

Let’s go through his recommendations and talk about the implications.
Continue reading “The Obama Plan – Part I”

What does your health insurance cover?

For many Americans, it’s open enrollment time, the period your employer give you to make changes in your health insurance coverage. You may not understand your insurance very well, but you have to understand this one important fact: your health care providers know even less about your insurance than you do. Most doctor’s offices have a sign that says something like, “Your insurance is your business.” There is know way for your doctor’s office to know all the details of all the different insurance plans.

Each state has different rules, and each part of the country differs in what kind of health plans predominate. In some areas, non-coverage is so common that it almost doesn’t matter what you know, other than the location of a free clinic. But for those of you looking at new or existing health plans, you must read through the documentation, especially the summaries that tell you what is and isn’t covered.

For example, many plans cover a yearly preventative physical. Many do not. If you don’t tell your doctor whether or not preventative services are covered, you may end up with an unexpected bill. Preventative physicals are often covered without a co-pay, but most other visits do have a co-pay.

Your plan will include a glossary, but some terms deserve special attention.
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